This week, new City Council President Rolando Lavarro Jr. will face perhaps one of the biggest challenges he’ll have to address all year: building consensus among his council colleagues for a 2013 municipal budget that can be adopted, while deflecting blame away from the administration of Mayor Steven Fulop for any unpopular spending cuts that may have to be made.

Lavarro—who was last week unanimously voted as Council President—has called a special council meeting for Wednesday, June 10 at 6 p.m. to discuss the 2013 municipal budget.

The calendar year is half over and Jersey City has yet to pass a municipal budget for the year. Former Mayor Jerramiah T. Healy presented a $486 million 2013 city budget to the council in February, and the governing body held a public hearing on the spending plan, but never adopted it.

Since then, city Budget Director Robert Kakoleski has said there may be an estimated $16 million budget gap this year. That $16 million shortfall is in addition to $5 million the Fulop administration will have to find to cover terminal leave benefits owed to approximately 27 senior Jersey City Police Department personnel who have either already retired, or who plan to retire, by the end of the year.

The young Fulop administration will have to cover this $21 million total shortfall through budget cuts, a tax increase, increasing revenue from other sources, or through a combination of these three strategies.

_____________Fulop will likely have to make some uncomfortable or unpopular budget decisions just one week into his tenure as mayor—and Lavarro, who has become one of Fulop’s top lieutenants, is certain to play a critical role in selling Fulop’s amended budget to both the council and to the public.____________

In one of his last meetings as a city councilman, Fulop—who at the time was mayor-elect—tried to get the council to amend the proposed budget and formally recognize the funding gap. Ultimately, he lacked the six votes he needed to add the budget amendment to the council agenda. The move was academic, anyway, since it is his administration that will have to cover the funding gap regardless. Had he been successful, the maneuver would have at least allowed him to easily pin responsibility for the gap on the Healy administration.

As it stands now, he’ll likely have to make some uncomfortable or unpopular funding decisions just one week into his tenure as mayor—and Lavarro, who has become one of Fulop’s top lieutenants, is certain to play a critical role in selling Fulop’s amended budget to both the council and to the public.

Shifting budget picture

Kakoleski said several adjustments in spending and revenue will have to be made to the budget.

For example, the hoped-for sale of a 2.5-acre plot of municipal land next to Jersey City Medical Center is unlikely to happen this year. The city had hoped to raise $12 million from the sale of that land.

The city initially expected to generate another $1.2 million from legal settlements and judgments, but is now on track to raise a slightly lower figure of $1 million.

The city also had a budget surplus of $2 million, which Kakoleski said has been used up. While this surplus may be restored by the state, at present it no longer exists.

While these anticipated revenues have gone down, a few city expenses have increased, Kakoleski told the council last month.

For instance, the city will have to pay an additional $250,000 for the recent municipal election. (About five-eighths of this amount will be reimbursed by the state, however.)

The city’s debt service (interest) was also affected by the federal sequester in Washington, D.C. earlier this year to the tune of $500,000. Most of this is for Gold America Bonds that are being used to help build the new Department of Public Works complex, Kakoleski said.

The city will also have to pay $275,000 in matching grants that it has received since the budget was first introduced.

Finally, Jersey City’s emergency authorization budget line item had to be increased by an additional $1.1 million.

“If you add up all those changes, and some other little things within the budget, we have a $16 million [increase] in the amount to be raised by taxation,” Kakoleski said in June.

These budget changes also come at a time when the new administration is trying to reform city government by expanding certain programs and departments while consolidating and downsizing others.

Lavarro: I’m the consensus builder

It is unclear how the Fulop administration plans to address the shortfall, but it will be up to Lavarro to be a bridge between the mayor and council.

“I really see my role as one of building consensus on the council,” Lavarro said last week. “I think we’re all on the same page as far as direction, the direction we want to see the city go in. But we have some different ideas among us about how best to get there. So, my role as council president is really to get all the ideas out there and then build support on the council for the best ideas and strategies. And that will mean working with the council members to compromise and work through differences when we have them.”

At a reorganization meeting held on Monday, July 1 the council members unanimously elected Lavarro as the new council president.

Of the nine current council members, all but two, Boggiano and Yun, ran on Fulop’s political slate in May.

The two non-Fulop councilmen have already started to show their willingness to be independents on the governing body. At the July 1 reorganization meeting Boggiano and Yun both abstained on the vote to appoint McElroy, Deutsch, Mulvaney attorney Jeremy Farrell as the city’s new corporation counsel, arguing he may have too little experience in abatements and PILOT (payment in lieu of taxes) agreements for the position.

Farrell was appointed to the position by a vote of 7-0-2 and was sworn into office immediately.

When asked whether this was an ominous sign for the future Fulop said, “I hope they won’t be obstructionists just for the sake of being obstructionists. I think they should have the strength of their convictions to either vote yes or no. As I said before, I hope they will consider what’s in the best interests of the city when making their decisions.”